Illinois residents slammed by sales taxes

Illinois residents are being slammed by ever-rising taxes, from a tax on soda pop in Cook County to a citywide tax increase of 0.5 percent in Danville.

With an average combined tax rate of 8.64 percent, Illinois
residents carry the highest sales tax burden in the Midwest and seventh-highest
in the nation.

The Illinois Policy
Institute pointed out the inequity of sales taxes in a recent article.
Low-income residents can ill afford any additional taxes, while middle-income
residents get hit from all sides -- higher sales taxes, increased property
taxes and a variety of fees for services.

"Sales taxes are fundamentally regressive and hurt
lower-income residents the most," the Illinois
PolicyInstitute's
Brendan Bakala wrote. "And like property
taxes, sales taxes also hurt middle-class people, making everything from a trip
to the grocery store to holiday shopping more expensive. Yet, tone-deaf local
governments in Illinois don’t seem to care; despite the harm that sales taxes
inflict on lower-income residents, 20 separate units of local government in
Illinois raised sales taxes at the start of 2017."

The Tax Foundation recently released the latest nationwide
data on sales taxes. The combined tax rate is higher in Illinois than in
notoriously expensive California and New York, at 8.64 percent vs. 8.25 and 8.49 percent, respectively. Adjoining states' rates range from 5.42
percent in Wisconsin to 7.89 percent in Missouri.

While Illinois' state tax rate is only 6.25 percent, 13th in
the nation, local taxes push the combined sales tax rate up. When local
governments need to fill the gap between revenues and expenditures, they look
to local sales taxes and property taxes to increase revenues. From taxing soda
pop to plastic bags to everything sold within the city limits, local
municipalities look to residents for revenue.

In addition to the sales tax, Illinois residents pay the
highest property taxes in the nation. The 2.67 percent property tax rate is
double the national median. Longtime homeowners are finding rising
property taxes are outstripping their mortgage payments.

“We’re being taxed out of our home,” Cassandra Bajaks told
the Illinois Policy Institute in a
2016 article. “It’s basically like we’re renting our home from the government.
[The rate] is well over 4 percent of what the house is worth. The only reason
we would ever leave our home or this state is property taxes, and that’s what’s
going to happen.”

Like the Bajak family, who planned to move to Florida within
a couple of years, Illinois homeowners and workers are leaving the state at an
increasing rate. A Paul Simon Public Policy Institute poll cited high taxes as
the main reason adult residents want to leave the state. Weather and better
employment and educational opportunities were also cited, but at a much lower
rate.

Illinois residents are not just thinking about leaving; they've been moving to warmer, cheaper and more business-friendly states for
more than a decade. Between July 2015 and July 2016, Illinois saw a net loss of
more than 114,000 residents due to out-migration.

High taxes in Illinois are actually eroding the tax base
as workers leave for greener pastures. When workers leave the state, they take
their income and tax dollars with them. The vicious cycle escalates as tax
revenues drop, governmental budgets increase and entities from the smallest
municipality up to the state level find new ways to nickel and dime Illinois
residents.

As the
Illinois Policy
Institute pointed out, there is a limit to the amount of taxes that
residents can pay. Instead of continuing to raise taxes to pay the bills,
politicians should look at ways to cut costs and reduce the tax burden on
Illinois taxpayers.

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